Capital debt

35. A Local Authority may borrow to fund capital expenditure.
Local Authorities may borrow from a number of sources including
banks and other financial institutions. Most Local Authorities
borrow from the
UK Government's Public
Works Loan Board (
PWLB). In
addition to borrowing Local Authorities may finance capital
investment through other credit arrangements such as finance leases
and Public Finance Initiatives (
PFI)
including the Non Profit Distribution model (
NPD). The
NPD model was
developed and introduced as an alternative to, and has since
superseded, the traditional
PFI model in
Scotland. The sum of borrowing and any credit arrangement to
finance capital investment is termed Capital Debt.

36. Councils estimated that total
HRA debt was
nearly £3.6bn as at 31 March 2017, an increase of around
£140m (3%) since 31 March 2016. However the debt decreased
for eight councils and was no higher for six councils. Part of the
increase in debt since 2007 is a consequence of increased borrowing
by councils to meet the capital costs of new build housing and
improvements to existing houses (see
section 12) and reductions in receipts from
the sale of council houses under
RtB scheme (see
section 13) which closed on 31 July 2016.
Whilst council housing debt is forecast to rise to £4.2bn (up
£600 million) by 2017-18.